The appointment of Bob Diamond as Barclays CEO has caused a stir in the City,
but you just can't keep a good man down, says Jeremy Warner.

Asked to name the stereotypical, cardboard cut-out of a greed-fuelled, bonus-driven, brash American investment banker – the breed said single-handedly to have brought the world economy to its knees – most Brits would plump for Bob Diamond, the Tigger-like workaholic who runs the investment banking arm of Barclays Bank.

Since he arrived on the London scene back in 1997, his multi-million pound bonuses have never been far from the headlines, while his apparent successes have attracted opprobrium, envy and disgust in equal measure. Few seem to epitomise the excesses and arrogance of his profession better than Mr Diamond. Lord Mandelson described him as the "unacceptable face of banking", while even George Osborne, the Chancellor, couldn't resist a gratuitous dig at this supposed embodiment of original sin during the populism of the election campaign. If you want a banker to bash, Diamond is your man.

How exquisite, then, that Barclays, one of the oldest and most venerable names in British banking, should choose not to punish this figure of public hate but to make him its next chief executive. In its very essence, this appointment seems to symbolise the effortless way in which culpable investment bankers, unlike their innocent victims, have glided through the maelstrom with their riches, way of doing things and positions virtually untouched, or even strengthened.

Despite the enormous costs of the crisis, for investment bankers such as Diamond, it's business as usual – bonuses and promotions all around. They've got away with it. Where's the justice, where's the contrition? Far from sacking him for his alleged part in unleashing economic Armageddon, Barclays has rewarded him by making him its overall boss. Is this entirely wise, and what does it mean, both for the future of Barclays and banking as a whole?

As ever, the public perception of this far from quiet American somewhat belies the underlying reality. I wouldn't claim to know him well, but I've met Bob Diamond enough times to understand a little of his charms and foibles. A former university lecturer, he has a boyish, and therefore infectious, enthusiasm that is impossible to dislike and, in no small measure, accounts for his extraordinary success. That's why I liken him to Tigger of The House at Pooh Corner. Bouncing is what Diamond does best. He just will not be put down.

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However bad it gets, for him it's always upwards, onwards and off towards the next big deal. Though he pays lip service – some of it genuine – to the need for banking reform, he is largely unrepentant about the supposed excesses of investment bankers. Indeed, in his efforts to build Barclays into a "bulge-bracket" Wall Street presence alongside Goldman Sachs, he has, in no small measure, been responsible for fuelling them. In attempting to attract the best talent to his endeavour, Diamond has been prepared to pay top dollar, leading to an almost unprecedented competitive wage spiral in finance, even as the system as a whole stood on the very brink of self-inflicted collapse.

But what marks Diamond out from the crowd at the head of the world's leading investment banks is not just that he survived, but also that he has succeeded. With the rest of Barclays laid low by a mountain of bad debts, Barclays Capital, his part of the bank, today accounts for the vast bulk of the company's profits – so much so that the real reason the Barclays board has given him the top job is that it couldn't afford not to.

This may seem an uncharitable view of an undoubtedly well deserved appointment, but it is also why Mr Diamond's elevation has long seemed inevitable. His pay may always have offended, but his achievements are indisputable; he's up there with Jamie Dimon of J P Morgan Chase as one of the true heroes of the banking crisis. Without Diamond, Barclays would have been lost.

There was plenty of sniping yesterday – even from members of the Coalition Government – along the lines of putting the croupier in charge of the depositors' money, but to have appointed anyone else would have been perverse. It was largely thanks to Mr Diamond's vision, guts and drive that Barclays was able to move in on the carcase of Lehman Brothers and acquire the investment bank's choicest assets at bargain-basement, fire-sale prices. This has turned out to be a transformational deal for Barclays, catapulting it overnight from also-ran in investment banking to premier league status. If he had not got the top Barclays job – and he is going to have to take a pay cut to accept it – there would have been plenty of rival banks only too keen to offer him something similar. The appointment is, therefore, as much about retention as choice.

Yet Diamond has not always commanded such respect among his peers. At the height of the banking crisis, few were prepared to accept his insistence that, unlike almost everyone else, BarCap remained in rude financial health. So low did the Barclays share price get that the bank was forced to bring forward its results in an effort to demonstrate its wellbeing, but still the shares kept falling.

"Are the markets accusing me of lying?" asked Marcus Agius, the Barclays chairman, in exasperation. No, it was not that. What the markets feared was that Diamond had pulled the wool over even his chairman's eyes, and that BarCap was a black box filled with hidden nasties that only he fully understood. Agius, if no one else, believed Diamond's assurances. It was partly this trust in the American's powers of alchemy that caused Barclays to shun the offer of aid from the British government and tough it out on its own instead. The gamble paid off, massively. Unlike Lloyds and Royal Bank of Scotland, Barclays remains unbeholden to the British taxpayer, which explains why it is able to ignore the Government's strictures on pay, small-business lending and much else besides.

Even if Vince Cable, the banker-bashing Business Secretary, wanted to veto Diamond's appointment, he would not be able to. Not that the City is entirely full square behind Diamond's coronation, either. Whatever talents its new chief executive may have as a Wall Street investment banker, Barclays is still a substantial universal bank with significant retail interests in the UK and elsewhere.

Diamond's go-getting skills may not be well suited to the political and regulatory quicksands that lie ahead. On the contrary, his uncompromising refusal to accept that there is anything fundamentally wrong with what is euphemistically known as "casino banking" stands every chance of rubbing everyone up the wrong way, and thus doing more harm than good.

This worry is only partially answered by the agreement of John Varley, the present chief executive, to stay on to handle relations with the Government's Banking Commission. The commission is examining the case for breaking up the banks so that they will never have to be bailed out by taxpayers again. Varley is vehemently opposed to such structural reform, as is Bob Diamond, but he has a better chance of convincing the commission than the red-in-tooth-and-claw investment banker.

As it is, there's actually very little chance of the commission taking this route, despite high-powered support for it from the Governor of the Bank of England, Mervyn King, and others. Both HSBC and Standard Chartered have made it plain they would quit London if the Government moved unilaterally to break them up, while Barclays would almost certainly move to Diamond's native New York. The damage to the City and, with it, the tax base would outweigh any potential benefits.

The other worry about Diamond is that, as an inveterate investment banker, he won't be able to resist the lure of the big deal and will end up risking Barclays in some calamitous misadventure. Yet the logic may equally work the other way round. His knowledge of the big deals that go wrong is just as likely to deter him. In any case, it will be up to Marcus Agius, the chairman, to stamp on any acts of hubris.

Whatever. Diamond once remarked of his faintly odd partnership with the present chief executive that, while Varley is seen as the gentle Englishman and he as the brash American, actually he is more gentle than generally thought, while there was a lot more steel in Mr Varley than met the eye. This is, of course, utter tosh. Mr Varley is no shrinking violet, but he is one of the last links with the English gentry of the Barclays tradition. Always courteous and measured, he has been with Barclays man and boy, and craftily even managed to marry into one of the old Barclays dynasties.

With Mr Diamond's appointment comes the final triumph of Wall Street ruthlessness over the gentlemanly capitalism of the old City. It's a defining break with the past. He deserves it, but no one should see this as seamless succession. One way or another, Mr Diamond will ensure that after 10 years, Barclays will be a very different bank from the one it is today.